Note: You must complete parts 1, 2, 3, and 4 of this comprehensive problem before completing part 5. Based on the following information and the post-closing trial balance that follows, prepare a balance sheet in report form at December 31 of the current year: The merchandise inventory is stated at cost by the LIFO method. The product warranty payable is a current liability. Vacation pay payable: Current liability $7,140 Long-term liability 3,360 The unfunded pension liability is a long-term liability. Notes payable: Current liability $ 70,000 Long-term liability 630,000 Kornett Company Post-Closing Trial Balance December 31, 20Y5 Account Title Debit Balances Credit Balances Petty Cash 4,500 Cash 243,960 Notes Receivable 100,000 Accounts Receivable 470,000 Allowance for Doubtful Accounts 16,000 Inventory 320,000 Interest Receivable 1,875 Prepaid Insurance 45,640 Office Supplies 13,400 Land 654,925 Buildings 900,000 Accumulated Depreciation—Buildings 36,000 Office Equipment 246,000 Accumulated Depreciation—Office Equipment 44,000 Store Equipment 112,000 Accumulated Depreciation—Store Equipment 5,000 Mineral Rights 546,000 Accumulated Depletion 30,000 Patents 42,000 Social Security Tax Payable 25,470 Medicare Tax Payable 4,710 Employees Federal Income Tax Payable 40,000 State Unemployment Tax Payable 270 Federal Unemployment Tax Payable 40 Salaries Payable 157,000 Accounts Payable 131,600 Interest Payable 28,000 Product Warranty Payable 76,000 Vacation Pay Payable 10,500 Unfunded Pension Liability 50,700 Notes Payable 700,000 Common Stock 500,000 Retained Earnings 1,845,010 3,700,300 3,700,300 Kornett Company Balance Sheet December 31, 20Y5 Assets Current assets: $ $ Total current assets $ Property, plant, and equipment: $ $ $ $ $ Total property, plant, and equipment Intangible assets: Total assets $ Liabilities Current liabilities: $ Total current liabilities $ Long-term liabilities: $ Total long-term liabilities Total liabilities $ Stockholders’ Equity $ Total stockholders’ equity Total liabilities and stockholders’ equity $
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Comprehensive Problem 3
Part 5:
Note: You must complete parts 1, 2, 3, and 4 of this comprehensive problem before completing part 5.
Based on the following information and the post-closing
| The merchandise inventory is stated at cost by the LIFO method. | ||
| The product warranty payable is a current liability. | ||
| Vacation pay payable: | ||
| Current liability | $7,140 | |
| Long-term liability | 3,360 | |
| The unfunded pension liability is a long-term liability. | ||
| Notes payable: | ||
| Current liability | $ 70,000 | |
| Long-term liability | 630,000 |
| Kornett Company Post-Closing Trial Balance December 31, 20Y5 |
||
|---|---|---|
| Account Title | Debit Balances | Credit Balances |
| Petty Cash | 4,500 | |
| Cash | 243,960 | |
| Notes Receivable | 100,000 | |
| 470,000 | ||
| Allowance for Doubtful Accounts | 16,000 | |
| Inventory | 320,000 | |
| Interest Receivable | 1,875 | |
| Prepaid Insurance | 45,640 | |
| Office Supplies | 13,400 | |
| Land | 654,925 | |
| Buildings | 900,000 | |
| 36,000 | ||
| Office Equipment | 246,000 | |
| Accumulated Depreciation—Office Equipment | 44,000 | |
| Store Equipment | 112,000 | |
| Accumulated Depreciation—Store Equipment | 5,000 | |
| Mineral Rights | 546,000 | |
| Accumulated Depletion | 30,000 | |
| Patents | 42,000 | |
| Social Security Tax Payable | 25,470 | |
| Medicare Tax Payable | 4,710 | |
| Employees Federal Income Tax Payable | 40,000 | |
| State |
270 | |
| Federal Unemployment Tax Payable | 40 | |
| Salaries Payable | 157,000 | |
| Accounts Payable | 131,600 | |
| Interest Payable | 28,000 | |
| Product Warranty Payable | 76,000 | |
| Vacation Pay Payable | 10,500 | |
| Unfunded Pension Liability | 50,700 | |
| Notes Payable | 700,000 | |
| Common Stock | 500,000 | |
| 1,845,010 | ||
| 3,700,300 | 3,700,300 |
| Kornett Company Balance Sheet December 31, 20Y5 |
|||
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| $ | |||
| $ | |||
| Total current assets | $ | ||
| Property, plant, and equipment: | |||
| $ | |||
| $ | |||
| $ | |||
| $ | |||
| $ | |||
| Total property, plant, and equipment | |||
| Intangible assets: | |||
| Total assets | $ | ||
| Liabilities | |||
| Current liabilities: | |||
| $ | |||
| Total current liabilities | $ | ||
| Long-term liabilities: | |||
| $ | |||
| Total long-term liabilities | |||
| Total liabilities | $ | ||
| $ | |||
| Total stockholders’ equity | |||
| Total liabilities and stockholders’ equity | $ |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
